The proposed Goods and Services Tax (GST) will to be levied at the first point of transaction in sales of goods and services under the regime of uniform GST, most likely to be rolled out in April 2017.
The model GST law, circulated in the meeting of Empowered Committee of State Finance Ministers, says a threshold annual turnover for levy of the tax will be at Rs10 lakh. For North East and Sikkim, the limit will be at Rs5 lakh.
The model GST law has 162 clauses and four schedules. In case of tax evasion, maximum imprisonment of five years with a fine was suggested.
The published draft Bill of the destination-based, dual value added tax (VAT)-type GST has clarified that all e-commerce transactions will attract GST, which will be collected by the service operator as soon as the supplier receives payment. Bringing e-commerce under the purview of GST, which will unify the myriad indirect taxes, is likely to end the kind of recent arbitrary moves by state governments of Uttarakhand, Assam and Bihar that imposed a 10% entry tax on goods sold online.
The law also proposes for setting up of an Authority for Advance Ruling (AAR) and a 'Composition Levy' for entities with turnover of Rs50 lakh. GST would be payable on the "transaction value", being the price actually paid or payable, and said to include all expenses in relation to sale such as packing and commission.
With GST to be applicable according to whether a transaction is an "intra-state" or "inter-state", the draft law provides separate provisions which will help an assessee determine the place of supply for goods and services.
The states will draft their own State GST based on the draft model law with minor variations, incorporating state-specific exemptions.
The central government is hoping to get the Constitution Amendment Bill passed by Parliament in the upcoming Monsoon Session. It plans to roll out GST from 1 April 2017.
Virtually, all states have supported the idea of GST except Tamil Nadu which has "some reservations", Finance Minister Arun Jaitley had said after the meeting of Empowered Committee on the long awaited indirect tax reform. Here are salient features of draft GST Bill…
a. GST rate not specified in the Constitutional Amendment Bill, as desired by the Congress. Finance Minister Jaitley said there was complete consensus at the Empowered Committee Meeting that there should be no constitutional cap on the GST rate.
b. All forms of "supply" of goods and services such as sale, transfer, barter, exchange, license, rental, lease and import of services of goods and services made for a consideration will attract CGST (central levy) and SGST (state levy).
c. As GST will apply on "supply", the erstwhile taxable heads such as "manufacture", "sale" and "provision of services", among others, will lose relevance.
d. The liability to pay CGST or SGST will arise at the time of supply.
e. With GST to be applicable according to whether a transaction is "intra-state" or "inter-state", separate provisions are there to help an assessee determine the place of supply for goods and services.
f. States will draft their own State GST based on the draft model law with minor variations.
g. GST would be payable on "transaction value", being the price actually paid or payable, and said to include all expenses in relation to sale, such as packing and commission.
h. As the threshold limit, the draft GST Bill proposes Rs10 lakh, and for Northeast states and Sikkim, an amount of Rs5 lakh.
The first two months of FY2016-17 witnessed strong inflows in to insurance and mutual funds. Net inflows in equity MF remained positive at Rs4,400 crore, similar to April but compares well with net redemption in March 2016 says a research note. Kotak Securities in the report says, "Overall net equity inflows to mutual funds have been positive for about two years but moderated to Rs2,500 crore to Rs3500 crore per month post December 2015 from about Rs6,000 crore month earlier. This raised some concerns about the sustainability of the inflows. As such, positive inflows over the past two months are comforting." Similarly, in insurance sector, after a subdued April, the annual premium equivalent (APE) growth bounced back to 26% for private players, largely led by higher ticket size of the business. "Life Insurance Corp of India (LIC) reported 22% growth on the back of higher volumes. Equity market inflows to equity mutual funds continue to remain strong; this may be driving growth in unit linked insurance plans (ULIPs) as well. Interestingly, among large players, ICICI Prudential Life is slowing down due to reduction in ticket size (likely lower ULIPs); its individual policies were up by over 40% in the past two months," the report added.
Kotak says, during April-May, private insurers gained market share in stable group businesses, while single business remained strong for LIC. The state run insurer continues to have a high share of single premium with 68% share of total premium. Private players have generally been selective in this segment; the share of single premium was 50% as against 34% in FY2016 of premium of private players. Bajaj Life, HDFC Life and SBI Life have a higher share of single premium in their overall businesses. In the group business, the share of private players increased to 26% from 20% in April 2016. HDFC Life and SBI Life gained market share.